HOW TO RENEGOTIATE AN RV PARK PURCHASE By Frank Rolfe

In the journey to buy an RV park at the correct price, it is common practice to have a period of renegotiation. Remember that the seller knows much more than you do when you sign that contract, and as you learn more of the facts in due diligence, it’s perfectly reasonable to need to adjust the price to reflect that reality. So how do you do it properly?

Two appropriate times

There are basically two appropriate times to renegotiate the price on an RV park with the seller: 1) immediately when you spot something that’s a deal killer and 2) when it’s simply the sum of a number of small items near the end of the due diligence period. You would never want to spend any more time on a deal that has hit a “deal-killing” snag, nor would you want to run the clock down to the wire on diligence which puts the seller in a bad position and will not be as willing to work with you.

Understanding the process from the seller’s perspective

Most sellers know that there is always a high probability that the buyer will want to re-trade. But much of your success is all about the presentation. If you are a seller, you gravitate to buyers that are all about facts and honesty. Because sellers, at the end of the day, are often not as concerned about dropping the price as they are about being “ripped off”. For example, if you call the seller and say “I just found out that this RV park has a third of it in the flood plain and it floods every few years, so I need a price reduction” then the seller knows your request is legitimate. However, if you just call up and say “I need a price reduction” for all the seller knows it’s just a bluff.

Be inclusive

It’s also very important – at all times – to be “inclusive” with the seller. When you bring the seller in to the puzzle of solving the pricing problem you are much more likely to come to a positive solution. If you say to the seller “because of all these items I did not know about, this deal is just to risky for me – we have to make it compelling to both of us” you are very likely to hear “I understand where you’re coming from, and I guess I do really need to lower the price”. Everyone likes to be included in the process and, after all, it’s the seller’s money at issue.

Be realistic

The seller is not going to just “give you” the RV park. Everyone is in this business for the money and the seller is trying to maximize the price as much as you are trying to minimize it. On top of that the seller may have an underlying mortgage to pay or partners who are not as friendly as they are. We have found that most deals have a renegotiation “limit” of around 20%. While there are exceptions, if you try too hard you may well price yourself out of the deal.

Conclusion

Renegotiating the price on an RV park is very achievable if you approach it reasonably and in the proper manner. All sellers are willing to listen to reason, but sometimes the buyer makes it seem more like an ultimatum rather than a fair request. Think win/win and you will be rewarded.

By Frank Rolfe

Frank Rolfe has been an active investor in RV parks for nearly two decades. As a result of his large collection of RV and mobile home parks, he has amassed a virtual reference book of knowledge on what makes for a successful RV park investment, as well as the potential pitfalls that destroy many investors.